Lining'S Massive Integration Of Distributors &Nbsp; &Nbsp; Strategic Change Is In Labor.

As China Sports

Lining said in the announcement, "although these reform measures will bring short-term pain, the order of Lining's brand may be under pressure for the next two quarters, but this will be conducive to long-term stable and healthy development of the group."

Zhao Yu, a strategic consultant of key sports Consulting Co. Ltd., told reporters that "the pain of the pformation process is inevitable, but the key is whether the market has recognized such a pformation."

500~600 low efficiency distributors will be integrated.

The reform measures of Lining's distribution system show that the integration channel is to integrate 500 to 600 single business shops, to increase the discount sales to 10%, and to increase the wholesale discount by 3 percentage points.

Earlier, media pointed out that Lining wants to close 500~600 poor performance stores.

Yesterday (December 27th), Li Ning Co executives told the daily economic news reporter: "this is not to close stores, but to integrate distributors.

The integration of inefficient distributors is to allow more efficient and larger distributors and distributors who want further development to purchase low efficiency distributors' stores.

At the same time, the group will encourage large dealers to increase the number of direct outlets.

In June 30th this year, Lining had 129 distributors and more than 2000 distributors.

More than 1700 distributors operate only 1 stores.

Most distributors' retail management capabilities, procurement capabilities and product lifecycle management are relatively weak, resulting in their shop performance and operating profit margins are not ideal.

In addition, dealers and distributors are facing the pressure of rapid cost increase, especially labor costs and rent increases.

Beijing Huashan's report points out that Lining's above initiatives "management expects to see the effect of channel reorganization as early as August 2011."

By increasing the discount rate, Lining intends to encourage large distributors to take up about 30% of the stores operated by small sub distributors.

This may lead to sharp fluctuations in orders in the short term.

In addition, dealers need to set up more discount stores to clean up existing stock in existing distribution channels.

Li Zhiqi, a marketing expert, said: "the increase in the number of stores has made the performance rise only in a short time. Many sports apparel brands have completed the enclosure process.

But the store plan has to face the rent problem.

In recent years, the rent growth of commercial real estate is fierce, and the survival of stores is in an awkward position.

Qin Chong, a Frost&Sullivan consultant, said: "the key to the current problem is to find a more healthy way of growth for those who are too focused on opening up shop."

Pain or unavoidable pain

"The stock price Lining encountered in Waterloo stock exchange should be the result of multiple factors.

The most direct factor is that the 2011 quarter second quarter results are not very satisfactory.

Zhao Yu said.

Lining said that in the second quarter of the 2011 fiscal year, the order of Lining products will be over. The total value of orders calculated according to the retail tag price is equivalent to that of the same period in 2010. The average retail price of clothing products and shoes products rose by more than 8%, but the order quantity decreased by more than 7% and 8% respectively.

The calculation group's impact on the dealer's wholesale discounts has been reduced by about 6% compared with the same period in 2010.

"This is basically the same as recession for many years in the sporting goods industry."

Zhao Yu said.

Another factor that brought Lining's stock price down is that Lining's strategy of high-profile entry into commercial real estate is phased out.

Lining, who wants to borrow from China, recently disclosed that "the HKGEM's GEM Listing Committee has ruled that the extraordinary Chinese acquisition of Lining is about 30% stake in the anti takeover paction."

So far, the case has been ruled out as an anti takeover paction and has not been successfully passed.

"Lining's dilemma is not a problem, but a problem for almost all sporting goods manufacturers."

Zhao Yu believes that through the rapid development of several years, China's sporting goods manufacturers have made brilliant achievements in the cluster development mode, but they will inevitably face the situation of gradually saturated market and high speed development momentum being curbed. "At this stage, they will face two choices, or expand without consequences, occupy enough large market share to squeeze their opponents out, or improve development efficiency and replace quantity with quality."

Lining chose the latter.

"The pain that Lining is facing this time can be said to be the leader of the market, and has begun a process of exploring the road."